Harvard Business Review- Revere Street Essay

1693 Words Nov 1st, 2013 7 Pages
After analysis of Mr. Alexander’s proposal, it is obvious why he should take advantage of a real estate investment opportunity. The experience he would gain coupled with the added income would establish a solid foundation for making more investments in the future. To this end, however, I find Alexander’s plan for the Revere Street property falls short. A major deficiency is that his projections are almost entirely predicated on estimates and assumptions that are neither conservative nor reliable. In a similar vein, Alexander’s “DIY” approach is not only exemplar of naiveté, but also suggestive of many implications that were overlooked in his proposal. And, even more discouraging, a best-case scenario analysis reveals that even without …show more content…
To bring this project to fruition and realize the gains projected, the following processes need to occur without incident: Alexander’s bid must be accepted by the seller, which requires that he obtain an appropriate mortgage, and avoid forfeiting his deposit, which could be something to the tune of $17,500 or more. For the closing sale of the property to go smoothly, there mustn’t be any lien issues from the existing bank withholding loan proceeds to the architect, since the construction was not finished. After this, the construction needs to be essentially error free and at an expedited pace to be complete by the four month timeframe set- and this is without a professional general contractor. Additionally, the job must not exceed the $165,000 figure that was given by a non-independent contractor, who very likely may have given a low-ball estimate to seem like an attractive candidate. The last architect was off by $115,0001, indicating that the scope of the work necessary to complete the job may be deceptive and much greater than anticipated, however there is no reserve beyond budgeted amount, making this possibly the hardest mission to accomplish. If, however, the project is completed within the four allotted months, and without going over budget, the next phase is filling vacancies, which Alexander is also planning to have accomplished by the end of the fourth month. This means that during the construction process, Alexander must also
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